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Can Gift Funds Be Used With A USDA Loan?

October 2nd, 2015 by Sean Stephens

So, can gift funds be used with a USDA loan?

Customarily a buyer has 2 types of out-of-pocket expenses:

Any required Down Payment & Settlement Charges, otherwise known as closing costs.


can gift funds be used with a usda loanUSDA loans are 100% financing so they eliminate the need for a down payment, but buyer’s are still responsible for their closing costs. Also when it comes to UDSA rural housing loans, many think that closing costs are simply “rolled” into the loan and not an out-of-pocket cost. This can affect USDA loan eligibility


Remember USDA rural housing loans permit for the ability to finance closing costs, but the appraised value must be higher than the sales price. Financing closing costs should be looked at as a potential benefit – NOT a guarantee.


In cases when there are funds due at closing, gift funds can be used with a usda loan provided the following:


    can gift funds be used with usda loans

  • An eligible source of gift funds can be from a family member
  • Gift funds must be documented to have come directly from the donor
  • Gift Funds can be documented by:
  1. Evidence of deposit into the borrower’s personal account; or if at closing
  2. Verify amount received by the closing agent along with source of gift funds
  • Common gift documentation could include, but not limited to: wire transfer confirmations, bank statements, or cancelled checks
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